Recent Publications

January 22, 2008
ALP: Smart Terminations--Ten things to consider when terminating an employee.
Keith Moorman

Not all terminations result in lawsuits, but some do. But knowing how to handle a necessary termination can make the process less painful for everyone, and reduce the chances of losing a lawsuit.

Defending employers in dozens of lawsuits has taught me ten principles for smart terminations.

1. Be nice. Terminated employees often testify that even though their legal claim concerns alleged discrimination or retaliation, their motivation for bringing the suit relates to the way they were terminated. For example, one plaintiff told me that because he was escorted from the building by security officers, during the middle of the work day, he felt compelled to sue and demonstrate that he was not a criminal. So playing nice, to the extent you can, may save you from a lawsuit. Just ask yourself, if I was being terminated for this reason, how would I want it handled?

2. Look for application/resume fraud. As you review the file before making the termination, be sure to take a look at the employee’s application. Application fraud (including resume embellishment) is rampant, and if you discovery evidence the employee lied to get the job, it may provide another reason for the termination, or convince the employee he is better off not suing over the termination.

3. Know the reasons for the termination. Are you terminating the employee because he was late twice last week without an excuse, or because he is a terrible salesman and you aren’t going to put up with him also being late? If there is a lawsuit over the termination, you don’t want different people giving different reasons for the termination, so be clear in your own mind why you are terminating the employee, before you terminate him.

4. Give a reason. For routine terminations, most employers simply tell a terminated employee that their services are no longer needed, and give no details. But if you have a specific reason for the termination, letting the employee know what it is may convince the employee not to sue, or help you in resulting litigation. For example, if you are terminating the employee because you caught him stealing, or because he repeatedly refused to obey reasonable work orders, and you are going to oppose the employee’s application for unemployment benefits (and argue in support that the employee was terminated for “misconduct”), why not go ahead and say in the termination letter the reasons for the termination? Indeed, if you have good and specific reasons for the termination, and you don’t mention them in the termination letter, you can bet that the employee’s attorney will later argue that you made the reasons up after the termination “to cover your wrongdoing.”

5. Know your history. You can terminate an employee for any reason, or for no reason, so long as the reason is not contrary to law, or contrary to a contract. But having the legal right to terminate an employee doesn’t mean you won’t get sued, and, may not mean that you won’t lose the suit! For example, what if the employee is pregnant, or just came back from a workers comp leave, or just came back from an FMLA leave? While these situations don’t preclude you from terminating the employee for an unrelated reason, they all increase the likelihood that the termination will lead to the employee filing suit. So know the employee’s history, and decide whether the benefits of terminating the employee right now, outweigh the risks associated with any lawsuit she might bring.

6. Consider a release. If you are reasonably concerned a terminated employee might sue, consider asking the employee for a release, in exchange for some small payment. But keep in mind that the payment has to be something to which the employee was not otherwise entitled. For example, you cannot withhold a paycheck the employee is due, or withhold benefits the employee is due, as a way of getting them to sign a release.

7. Don’t gossip. When you terminate an employee, your other employees will want to know why, but avoid the temptation to explain, and certainly avoid the temptation to “prove” the employee was wrong and the company was right. You should have a consistent, reasonable, professional reason for the termination, and if you start talking about it, you open yourself up to inconsistencies and misunderstandings. It is okay to announce that the employee no longer works for the company, but stop there. If pressed, just say that personnel matters are best kept confidential.

8. Stop gossip. If you learn that the other employees are gossiping among themselves as to the reasons for the termination, tell them to stop, and remind them that just as they would not want their personnel matters discussed among other employees, they should not discuss this employee’s termination.

9. Be cautious on recommendations. If you get calls from persons interested in hiring your terminated employee, it is best to have a policy of merely confirming that the person worked for you, and the dates of the employment, and nothing more. Saying more may help the prospective employer, but it won’t do you any good.

10. Talk to a lawyer. If you are terminating an employee for something unusual, seek legal advice. For example, can you terminate an employee because he keeps a gun in his car, because she filed for bankruptcy, because he was quoted in the paper on a controversial issue, or because she filed a police report against a co-worker for something that happened on company property? While the general rule is that absent a contract of employment, an employer may terminate an employee for any reason, or for no reason, so long as he does not terminate the employee for an illegal reason, what is “illegal” may not always be clear. So if the reasons for the termination are a little unusual, consider asking counsel for advice.